Sunday, November 14, 2010

Credit card advice for a newbie?

I was just approved for my first credit card (credit limit: $250). I want to build my credit with it but I don't want to get into debt with it. How can I go about doing so? Will it help if I pay it off in full when I get my bill or should I just pay the minimum?

BTW I have money...I just got the card to build my's not something I need so I have no intentions to going over limit..I just plan to buy something small each month to keep something on it.Credit card advice for a newbie?
There is no big secret to building good credit. The means are easy.

1) never use more then 30% of your credit line (if your credit line is $250 never charge more then $75.00 and pay it off BEFORE the next statement date. If you can pay it in full, then it is OK to go over the 30% but don't do it often.

Credit Card companies report what your balance owed to the CRA's every month. If you were to charge the same amount every month and pay it off in full, it would still show on your report that you owe a balance. The secret is to let the balance drop to $0 and not use the card for a few months.

2) Never miss a payment or be late, this is the worst you can do.

3) Do not apply for a lot of credit as each application places a hard hit (inquiry) on your credit report and lowers your score.

To learn more, I recommend you read about credit directly from FICO at the following web site.

Hope this helps answer your question and be sure to avoid the credit pit falls.Credit card advice for a newbie?
If you pay it off every month I don't think your credit rating will grow very fast. I'm no expert, but I know that because I pay mine off every month the credit card companies consider me to be a dead beat and undesirable.

If they're not making any money off of you, then you're no good to them.
Don't use a credit card to build credit. If you do, you are BUYING a FICO score, not EARNING it. You'd be much, much better off saving money in an investment account and/or savings account. I haven't had a CC for over 20 years. Hasn't stopped me from buying a car and home.
Yes, it's excellent if you can afford to pay in full. The least amount of debt you show you and the more credit avail will boost your score. But, it is bad if you start having too many inquiries in to your credit.

Always try too keep your limit under 50% of the avail credit.
sgt big red hit the nail on the head. I see you getting some bad advice from the other users. Do some research on the credit reporting sites. Some have score simulators(you have to pay for these) to see how certain actions will affect your credit score. Keep your new credit card balance as low as possible. No need to carry a balance but you do need to use it every now and then to keep it active.
Credit Cards can get you in trouble. Trust me, my personal experience with credit cards has lead me to believe that they're the devil! lol Although...

It is an okay way to build some credit. Trust me, though it won't be enough to help you get a car loan, or mortgage.

The best thing you can do is use it to buy something small, like pay for your gas. And immediately pay it off in full. You don't want to have to pay finance charges or interest which you will be charged if there is a balance on your card after your billing statement.

Treat your credit card like you would a debit card. That way you don't spend money you don't have.

Its important to learn how to manage your finances. Practice spending only what you have and you will be just fine!
Just use it for gas and small items and pay the balance the following month. Your credit score changes about every 12 months. Also make sure your credit card belongs to the credit bureau .

No comments:

Post a Comment